As Spain and Catalonia head toward a constitutional collision over the region’s claim to independence, lawmakers on both sides of the crisis are pointing to a way out: north, to the Basque Country.
Among the verdant mountains of the Basque Country, which borders France, a once-violent campaign for independence has petered out, with generous fiscal autonomy from Madrid helping to keep popular agitation for independence in check.
“We don’t have that economic resentment,” said Aitor Esteban, organizer for the Basque National Party in the Spanish parliament in an interview at party headquarters in Bilbao. “People don’t feel that need to act upon a grievance about money; That makes a big difference.”
The Catalan government is not calling for a Basque-style deal, insisting instead on independence after declaring overwhelming support for secession in an Oct. 1 referendum, banned by Madrid.
However, the most moderate lawmakers in the region’s ruling coalition privately said they could drop independence claims if they were given the tax autonomy that the Basque Country enjoys.
In Madrid, some socialists have suggested it could serve as a model for a compromise that would defuse Spain’s biggest political crisis since a failed coup in 1981, although the cost to the central government would be significant.
Basques staged modest protests over Madrid’s violent crackdown on Catalonia’s referendum, but the crisis has failed to rekindle secessionist fervor on the streets of Bilbao, the Basque capital nestled on the banks of the Nervion.
Catalan flags hang from balconies alongside the Basque flag in a sign of solidarity, but Bilbao is prosperous and peaceful.
Where once unionist politicians needed bodyguards and car bombings were a constant fear, tourists now crowd the taverns of the old town and the world-famous Guggenheim Bilbao museum.
Just 17 percent of Basques want independence and less than half would like to hold a referendum on the issue, a University of Deusto poll showed.
Basque militant group Euskadi Ta Askatasuna, or ETA, which killed more than 850 people in a decades-long campaign to carve out a separate state, effectively ended its armed resistance this year when it surrendered its weapons.
The region now has one of the highest economic outputs per capita and one of the lowest unemployment rates in Spain.
“The independence debate is on standby in the Basque Country, because of great fatigue after years of violence and uncertainty after the economic crisis,” University of Deusto sociology professor Xabier Barandiaran said.
The Basque Country’s fiscal autonomy is among the most generous of any region in Europe, dating back to the 19th century and enshrined in Spain’s 1978 constitution.
If it were to be extended to Catalonia, an economically more powerful region accounting for one-fifth of national production, the Spanish state would lose about 16 billion euros (US$19 billion), a 2014 study by research house CSIC said.
That would equal about 13 percent of next year’s budget, and affect Spain’s deficit and borrowing costs.
For that reason, Spanish Prime Minister Mariano Rajoy has ruled out such generous treatment for Catalonia.
Under the Basque Country’s accord with Madrid, the region collects nearly all its own taxes, which are forecast to total 13 billion euros this year.
It is due to return 800 million euros to Madrid in what is known as an annual quota to cover the costs of national expenses such as defense or infrastructure.
Rajoy has sweetened that arrangement since he regained power at the head of a minority government last year, as the price of securing Basque National Party support for this year’s budget.
It has proved unpopular with other regions who would almost certainly oppose any similar deal for Catalonia, as it would mean cutting their share of state revenue.
Typically, regions pass taxes to Madrid which redistributes money back to them according to a formula that favors the poorer regions.
Former Catalan leader Artur Mas tried to hold talks with Rajoy in 2012 about granting Catalonia powers to raise and spend its own taxes, but the prospect of negotiations in the current climate look bleak.
Catalonia has long said it pays a disproportionate level of taxes to Madrid in relation to the central funding it receives.
A study backed by the Spanish Ministry of Economy, Industry and Competitiveness said Catalonia pays the state 9.9 billion euros more than it receives.
The Ministry of Economy and Knowledge of the Government of Catalonia said it is even higher.
Economists say an overhaul of the fiscal relationship between Madrid and the regions is overdue because the current system has led to intense tax competition between regions. Some autonomous communities have become under-financed, resulting in cuts in public services.
“Now the situation is so critical, there might just be the political momentum needed to tackle it,” said Antonio Garcia Pascual of Barclays Capital.
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